World Bank Cuts Bulgaria Economic Growth

The World Bank has revised downwards its forecasts for Bulgaria's economy, estimating it is to expand by 1.8% in 2013, down from its earlier forecast at 2.5%.

The country's budget has set it at 1.9%.

The latest version of the twice-yearly Global Economic Prospects report describes a "dramatic" easing of financial conditions around the world, stemming in part from policy changes to soothe the bond markets in Europe. Still, it warns that global growth will continue to be sluggish for years to come.

In the report, the World Bank estimates the world economy grew just 2.3% in 2012. It expects growth to pick up only modestly in the coming years, from 2.4% in 2013 to 3.3% in 2015.

Developing countries were responsible for more than half of global growth in 2012, the report said, and they will continue to be an engine of growth. The report estimates that developing countries grew 5.1% in 2012, and that the pace of growth will accelerate to 5.8% in 2015.

"Four years after the crisis, high-income countries are still struggling," Andrew Burns, the report's lead author, said in an interview for New York Times.

"Developing countries need to respond to that difficult environment not through fiscal and monetary stimulus, but rather by looking to reinforce their underlying growth potential in order to have sustainably stronger growth going forward."

The report says that significant downside risks to global growth persist, including stalled progress in solving the European debt crisis, fiscal uncertainty in the United States, a decline in investment in China and spiking oil prices.

However, the report said, "the likelihood of these risks and their potential impacts has diminished, and the possibility of a stronger-than-anticipated recovery in high-income countries has increased."

Developing countries may start to reorient away from a crisis mind-set, the bank said.

"The whole discussion has been dominated by the global crisis," said Hans Timmer, the director of the development prospects group at the World Bank. "It's logical that you are distracted, but there are several problems with that: If you don't go back to the reform agenda, you don't have that growth in the future."